Nitrogen Trading in Lake Taupo: An Analysis and Evaluation of an Innovative Water Management Policy

57 Pages Posted: 1 Sep 2015

See all articles by Madeline Duhon

Madeline Duhon

Stanford University

Hugh McDonald

Motu Economic and Public Policy Research Trust

Suzi Kerr

Motu Economic and Public Policy Research Trust

Date Written: June 20, 2015

Abstract

This paper provides an overview and early evaluation of the Lake Taupo nitrogen cap and trade programme, established as part of Waikato Regional Council’s 2011 Regional Plan Variation Five. The policy establishes a catchment-wide cap on nitrogen losses by allocating farmers individual nitrogen discharge allowances and allowing those farmers flexibility to trade allowances amongst themselves and to sell allowances to a public fund while remaining within the overall catchment cap. The Taupo trading scheme is the world’s first agricultural non-point-source water-quality cap and trade scheme. This paper explains the structure and evolution of the nitrogen trading market, and analyses its impact thus far. Research drawn from written material and descriptive quantitative data provides the basis for analysing the policy, while interviews with relevant stakeholders provide insight into the successful, surprising and contentious issues that arose throughout its development and implementation.

Keywords: nitrogen markets, cap and trade, policy analysis, water quality, trading, Lake Taupo

JEL Classification: Q53, Q57, Q58

Suggested Citation

Duhon, Madeline and McDonald, Hugh and Kerr, Suzi, Nitrogen Trading in Lake Taupo: An Analysis and Evaluation of an Innovative Water Management Policy (June 20, 2015). Available at SSRN: https://ssrn.com/abstract=2653472 or http://dx.doi.org/10.2139/ssrn.2653472

Madeline Duhon (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Hugh McDonald

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Suzi Kerr

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand
+64 4 383 4250 (Phone)
+64 4 383 4270 (Fax)

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